I post the following query upon the request of an Internet acquaintance. It seems that the fire in the Discussion Forum may need some wood from time to time.
Quote
“As I am unable to post a query in DC Pro Focus and you have been so kind with me, please post the following:
"We are confirming bank. Beneficiary presents documents at our counters. After checking them we found several discrepancies. We advised beneficiary and he instructed us to send MT750 swift message to issuing bank detailing all reserves contained in documents (Full set (3/3) original of B/l submitted instead of 2/3 Beneficiary Certificate stating 1/3 original B/l have been sent to applicant not submitted.) But as per beneficiary’s instructions documents remain at our counters.
2 days later beneficiary presents at our counters a new commercial invoice with different amount than the first presented (difference minor than USD 30 due to a slight unit price difference) (Unit price not indicated in L/C).
What can we do? Should we accept the new commercial invoice and then advise the issuing bank through another MT750 or we must not accept the change? Is it acceptable send a new MT750 or it has not any value since we have already sent one? What if applicant accepts the reserves as pointed in our first MT750?
Thanks for your cooperation.”
Unquote
[edited 4/12/02 11:19:40 AM]
Substitution of a Discrepant Doc. After Presentation
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hatemshehab
- Posts: 220
- Joined: Fri Apr 05, 2019 5:19 pm
Substitution of a Discrepant Doc. After Presentation
We cannot comment on the query unless the following doubts are cleared:
(1) Are the invoice and BL re-presented or replaced due to removal of previously advised discrepancies?
(2) Is the second presentation within DC expiry and also made within 21 days after shipment?
(3) What exactly are the details of the reserve clauses?
(4) What are the discrepancies? Are they valid ones or grey area discrepancies?
www.tolee.com
[edited 4/11/02 9:04:19 PM]
(1) Are the invoice and BL re-presented or replaced due to removal of previously advised discrepancies?
(2) Is the second presentation within DC expiry and also made within 21 days after shipment?
(3) What exactly are the details of the reserve clauses?
(4) What are the discrepancies? Are they valid ones or grey area discrepancies?
www.tolee.com
[edited 4/11/02 9:04:19 PM]
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hatemshehab
- Posts: 220
- Joined: Fri Apr 05, 2019 5:19 pm
Substitution of a Discrepant Doc. After Presentation
Invoice was the only replaced document within L/C validity.
The discrepancies noted by the confirming bank to beneficiary were:
"Your presentation of documents dated... for USD...under
Documentary credit number xyz please note we have found following reserves:
1. Full set (3/3) original of B/l submitted instead of 2/3
2. Beneficiary certificate stating 1/3 original B/l have been sent to applicant not submitted.
We wait for your instructions. According art. 14 UCP 500 documents remain at your disposal"
The discrepancies noted by the confirming bank to beneficiary were:
"Your presentation of documents dated... for USD...under
Documentary credit number xyz please note we have found following reserves:
1. Full set (3/3) original of B/l submitted instead of 2/3
2. Beneficiary certificate stating 1/3 original B/l have been sent to applicant not submitted.
We wait for your instructions. According art. 14 UCP 500 documents remain at your disposal"
Substitution of a Discrepant Doc. After Presentation
INCONSISTENCY IN PRESENTED DOCUMENTS AND THEIR DATA CONTENT
The presentation is inconsistent by itself, when the beneficiary's certificate (although not being presented but it is a term/instruction of the DC anyway) states that one original BL has been sent to the applicant but full set of three original BsL are presented.
However, there is one situation where this inconsistency cannot be counted as a discrepancy. Would members guess what it is?
We post this riddle just to add interest to the Discussion Forum and as a lateral thinking exercise.
TIPS: Another new discrepancy (maybe valid and maybe not, all depends on how you look at it) may be introduced as a result.
www.tolee.com
[edited 4/12/02 3:28:15 PM]
The presentation is inconsistent by itself, when the beneficiary's certificate (although not being presented but it is a term/instruction of the DC anyway) states that one original BL has been sent to the applicant but full set of three original BsL are presented.
However, there is one situation where this inconsistency cannot be counted as a discrepancy. Would members guess what it is?
We post this riddle just to add interest to the Discussion Forum and as a lateral thinking exercise.
TIPS: Another new discrepancy (maybe valid and maybe not, all depends on how you look at it) may be introduced as a result.
www.tolee.com
[edited 4/12/02 3:28:15 PM]
Substitution of a Discrepant Doc. After Presentation
Dear Hatem,
Please clarify the change in amount of the invoice presented later is gross amount or unit price.
We note that you have not provided information on all our doubts and hence we cannot comment further.
www.tolee.com
[edited 4/12/02 4:05:04 PM]
Please clarify the change in amount of the invoice presented later is gross amount or unit price.
We note that you have not provided information on all our doubts and hence we cannot comment further.
www.tolee.com
[edited 4/12/02 4:05:04 PM]
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larryBacon
- Posts: 689
- Joined: Fri Apr 05, 2019 5:26 pm
Substitution of a Discrepant Doc. After Presentation
The issue of substitution of invoice within the permitted time should be addressed by reference to the correspondence to the bene & issuing bank.
If we take a similar example :
While docs are being examined by the nominated bank, the invoice is substituted showing a higher value. As unit price is not at issue, the amount above the value of the first invoice is not relevant. In such a case, the nominated bank would surely accept the substitution. Assuming that such substitution complies with the credit, it is unlikely that any reference to it would be made in forwarding docs to the issuing bank.
If the timing is, however, slightly different, so that the nominated bank has already advised discrepancies to bene & issuing bank, this should not alter the decision to accept the substituted invoices. Of course, it would be necessary to formally advise the increase in value of the presentation and whether or not this altered the list of discrepancies.
Substitution of documents is commonplace and a waiver for a list of discrepancies may be sought where it is doubtful that such substitutions are possible within the time allowed. Despite seeking such waiver (for safety sake), it may happen that some or all of the discrepancies are corrected by substitution within the time allowed. Obviously it is encumbent on the nominated bank to so advise such substitutions to the issuing bank, regardless of whether it alters the value of the presentation or quantity of goods shipped (e.g. one discrepancy may have involved quantity differences between documents).
T.O.
I presume your little puzzle refers to the possible case of the issuing bank also being the applicant. Is this correct ?
Laurence
If we take a similar example :
While docs are being examined by the nominated bank, the invoice is substituted showing a higher value. As unit price is not at issue, the amount above the value of the first invoice is not relevant. In such a case, the nominated bank would surely accept the substitution. Assuming that such substitution complies with the credit, it is unlikely that any reference to it would be made in forwarding docs to the issuing bank.
If the timing is, however, slightly different, so that the nominated bank has already advised discrepancies to bene & issuing bank, this should not alter the decision to accept the substituted invoices. Of course, it would be necessary to formally advise the increase in value of the presentation and whether or not this altered the list of discrepancies.
Substitution of documents is commonplace and a waiver for a list of discrepancies may be sought where it is doubtful that such substitutions are possible within the time allowed. Despite seeking such waiver (for safety sake), it may happen that some or all of the discrepancies are corrected by substitution within the time allowed. Obviously it is encumbent on the nominated bank to so advise such substitutions to the issuing bank, regardless of whether it alters the value of the presentation or quantity of goods shipped (e.g. one discrepancy may have involved quantity differences between documents).
T.O.
I presume your little puzzle refers to the possible case of the issuing bank also being the applicant. Is this correct ?
Laurence
Substitution of a Discrepant Doc. After Presentation
Hello Laurence,
Our congratulations! Your answer is one of the right answers.
You may claim your prize in April ICC Banking Commission meeting in Paris - a kiss from T. O. However, if you cannot come personally, such as due to busy business engagements, we do not mind it if you send an agent, ideally of the opposite sex.
T. O.
Our congratulations! Your answer is one of the right answers.
You may claim your prize in April ICC Banking Commission meeting in Paris - a kiss from T. O. However, if you cannot come personally, such as due to busy business engagements, we do not mind it if you send an agent, ideally of the opposite sex.
T. O.
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hatemshehab
- Posts: 220
- Joined: Fri Apr 05, 2019 5:19 pm
Substitution of a Discrepant Doc. After Presentation
Dear TO
1. There was no replacement of the bill of lading, the only documemt that were presented to be replaced was the invoice.
2. The invoice was represented for replacement within lc validity
3. The reserve clauses were just what the bank adviced the beneficiary about the status of documents. bank's advice is quoted
4. Discrepancies are stated in the query.
5. The aleration in amount of invoice was due to unit prices changes, the credit did not indicate any unit price.
Thank you for your coooperation.
As for the riddle I guess it had to do with the slight increase in the invoivce amount. as per article 37 b "Unless otherwise stipulated in the Credit, banks may refuse commercial invoices issued for amounts in excess of the amount permitted by the Credit. Nevertheless, if a bank authorised to pay, incur a deferred payment undertaking, accept Draft(s), or negotiate under a Credit accepts such invoices, its decision will be binding upon all parties, provided that such bank has not paid, incurred a deferred payment undertaking, accepted Draft(s) or negotiated for an amount in excess of that permitted by the Credit."
Wish you a spicy stay in Paris, spare some prizes (xxx) for your return journey to canada.
Hatem
1. There was no replacement of the bill of lading, the only documemt that were presented to be replaced was the invoice.
2. The invoice was represented for replacement within lc validity
3. The reserve clauses were just what the bank adviced the beneficiary about the status of documents. bank's advice is quoted
4. Discrepancies are stated in the query.
5. The aleration in amount of invoice was due to unit prices changes, the credit did not indicate any unit price.
Thank you for your coooperation.
As for the riddle I guess it had to do with the slight increase in the invoivce amount. as per article 37 b "Unless otherwise stipulated in the Credit, banks may refuse commercial invoices issued for amounts in excess of the amount permitted by the Credit. Nevertheless, if a bank authorised to pay, incur a deferred payment undertaking, accept Draft(s), or negotiate under a Credit accepts such invoices, its decision will be binding upon all parties, provided that such bank has not paid, incurred a deferred payment undertaking, accepted Draft(s) or negotiated for an amount in excess of that permitted by the Credit."
Wish you a spicy stay in Paris, spare some prizes (xxx) for your return journey to canada.
Hatem
Substitution of a Discrepant Doc. After Presentation
Hello Hatem
3 original BsL were presented instead of 2 original BsL as required in the DC. This by itself is a valid discrepancy.
If the applicant and the issuing bank both waived the two discrepancies, including the missing beneficiary’s certificate (to certify that one original BL has been sent to the applicant directly), then payment would come and there should be no problem.
If the applicant and the issuing bank did not waive the two discrepancies, then re-presenting the invoice with the unit price changed did not save the day, as the two valid discrepancies were still there.
If the DC did not expire and the UCP 500 sub-Article 43 (a) 21 days deadline (applicable not only to BL but also to all presented documents if the presentation contains a transport document. Otherwise this 21 days deadline would not be applicable) did not expire by the time the re-presented invoice reached the issuing bank's counter, accompanied with or preceded by an appropriate SWIFT message to explain everything, then we do not see why the issuing bank could reject the re-presentation of the new invoice, (with a gross value not exceeding the DC drawable amount), particularly that the unit price was not mentioned in the DC. Although there is no express stipulation in the UCP to govern re-presentation, from common sense point of view, this should be allowed.
We made some reasonable assumptions in order to provide our responses.
www.tolee.com
[edited 4/13/02 11:12:07 PM]
3 original BsL were presented instead of 2 original BsL as required in the DC. This by itself is a valid discrepancy.
If the applicant and the issuing bank both waived the two discrepancies, including the missing beneficiary’s certificate (to certify that one original BL has been sent to the applicant directly), then payment would come and there should be no problem.
If the applicant and the issuing bank did not waive the two discrepancies, then re-presenting the invoice with the unit price changed did not save the day, as the two valid discrepancies were still there.
If the DC did not expire and the UCP 500 sub-Article 43 (a) 21 days deadline (applicable not only to BL but also to all presented documents if the presentation contains a transport document. Otherwise this 21 days deadline would not be applicable) did not expire by the time the re-presented invoice reached the issuing bank's counter, accompanied with or preceded by an appropriate SWIFT message to explain everything, then we do not see why the issuing bank could reject the re-presentation of the new invoice, (with a gross value not exceeding the DC drawable amount), particularly that the unit price was not mentioned in the DC. Although there is no express stipulation in the UCP to govern re-presentation, from common sense point of view, this should be allowed.
We made some reasonable assumptions in order to provide our responses.
www.tolee.com
[edited 4/13/02 11:12:07 PM]
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hatemshehab
- Posts: 220
- Joined: Fri Apr 05, 2019 5:19 pm
Substitution of a Discrepant Doc. After Presentation
This query came from a country in Latin America. Obviously the beneficiary having opted for the presentation of the full set of B/Ls to the confirming bank raises the eye brow on why did the beneficiary in the first place did not request for amendment to this particular condition.
The beneficiary having consented to perform under such L/C and at the same time not complying with its requirement has put himself in a peculiar situation. He has shipped the goods but his presentation is discrepant. I agree with you the replacement of invoice would not save the beneficiary’s day.
[edited 4/18/02 10:02:02 AM]
The beneficiary having consented to perform under such L/C and at the same time not complying with its requirement has put himself in a peculiar situation. He has shipped the goods but his presentation is discrepant. I agree with you the replacement of invoice would not save the beneficiary’s day.
[edited 4/18/02 10:02:02 AM]